Q2 2021 Zhihu Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Jew, who incorporated second quarter 2021 financial results conference call at.
At this time all participants are in listen only mode. After the speaker's presentation. There will be a Q&A session. Today's conference is being recorded at this time I would like to turn the conference over to MS. Ching Ching to head of investing Investor Relations. Please go ahead ma'am.
Thank you operator, Hello, everyone welcome to our second quarter 2021 financial results conference call. Joining us today are Mr. Jun, Zhang our CEO and chairman of the company and Mr. Sung Lee our CFO.
Before we start we would like to remind you that today's discussion may contain forward looking statements, which involve a number of risks and uncertainties.
Actual results and outcomes may differ materially from those mentioned in today's announcement and the discussions the company does not undertake any obligation to update this forward looking information except as required by law.
During today's call management will also discuss certain non-GAAP financial measures for comparison purpose only.
A definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. Please see the earnings release issued earlier today.
In addition, a webcast replay of this conference will be available on our website at IR Doctor, who dot com.
Now I'll turn the call over to Mr. Certainly I Wouldnt CFO.
Yeah.
Thank you Cindy.
I'm pleased to deliver today's opening remarks on behalf of Mr. Julia found there to be obstacles.
Thank you for joining jugal 2021 second quarter earnings conference call.
Our user base continued its rapid growth momentum during the second quarter.
Our average M. A huge reached $94.3 million up.
46% year over year.
All of which over 96% are more like mobile and E U.
Meanwhile, we continue to increase our platform high quality content offerings.
As of June 30.
The cumulative piece of the content on our platform reached 420 million, including 368 million questions answered.
Representing a year over year increase of 48% and 43% respectively.
In the second quarter.
Number of monthly active content creators was $3.6 million.
Within this number we saw a 75% year over year increase in the average number of multi video content creator.
In the quarter or a content centric monetization approach continue to propel robots growth evidenced by a 144% year over year increase in revenue to RMB 338 million and a 121% year over year increase in average monthly paying members.
Other achievements in the second quarter are ultimately an outgrowth of our founding belief, which continue to be our long term guiding force.
By building a high quality contents Dunshee community.
Eric There is the buy reliability and a trustworthy news, we have been able to few healthy user growth and outstanding community engagement.
User number growth.
Additional extension of user demand and a valuable supplement whoever content library in terms of a new era of the format.
<unk> expanded our content centric monetization channels.
Nurtured the flywheel effect of our ecosystem.
In the second quarter.
We further upgraded our high quality community content vendors by introducing sensor fulfillment and the new benchmark in evaluating content value on chicken platform.
As a result of promoting content with a sense of fulfillment and a strong effort to build brand awareness. We saw eight remark look well younger demographics from wherever cities as well as a significant increase in cross generational user interaction.
We believe our efforts and achievements in the second quarter. He has a solid foundation for a robust long term development.
Our content offerings continue to grow rapidly in the second quarter.
In the process of achieving rapid growth, it's why till to continually maintain a high quality user experience.
Well listen this end and as I mentioned in our first quarter earnings Conference call.
We have continued to optimize our content structure by supporting high quality content and handling low quality content.
In the second quarter, we further refined our assessment standard.
For quality content by introducing what we called the central fulfillment Center.
We believe content with a sense of humour standard based place one or more of the following characteristics.
Broadening horizons, providing solutions and they're resonating with mine.
Based on this assessment, we upgraded our distribution algorithm for reading as well as graphic and text content to encourage more creation submissions of content meeting these criteria and ensure that once produced it achieved higher exposure in a greater traffic allocation.
We believe this will not only empower content creator is more views, but also encourage more creation of high quality content with a sense of humans.
Creating a virtuous cycle and a self reinforcing content ecosystem.
Aligned with a sense of humans Thunder, we allocate a high distribution weight to a <unk>.
A large volume of unique high quality science content onto the platform.
Further the Lady five defense category as a strategic cornerstone content vertical on our platform.
In another recently held event seeking answers inside.
Our concert received over 10 million interactions and over 100 million page views.
Superior content from professionals and experts enables users to fully to truly broaden their horizons and again, a real sense of humans.
It's important to note that concept with the ability to broaden horizons can be more than just harcrow knowledge. It can also be just interesting and instructive content.
Such as content that inspires further exploration.
Lots treated by those phone during a recent children's day event.
Examples of such items include.
What should I do know when their drafts ears are itchy and <unk> light as well consumption tape produced by fashion editors I'm sorry. The question why are the majority of luxury goes producing Italy and France.
Second we believe content that helps users solve problems and make a decision also confers a sense of humans.
Nowhere more evident than in the recent natural disasters in China.
This July from Joel sitting on unproven.
Or cause catastrophic flooding that caused the tragic loss of life and devastating property damage in the air.
Effort to help.
Jim Hall, Yeah, Hey, Duke.
Who use or an accountant greater from the northern sea they'll hobby.
Loaded a detailed self health menu four main storm.
It was quickly uphold it forward it on to cool and received over 30 million views in just a few days.
This menu attracted nation nationwide attention.
Generated a robust discussion and it was also reported by multiple media outlets such as CCTV News observer adult com and others.
The intent is tenuous knit national exposure off the menu and the collective discussions you factually helped many people in real time and suffering from this disaster.
The strength in depth discussions have surged a wider spectrum of disaster related content verticals, including real time disasters in progress Precautious full post disaster may construction.
Clothing commercial insurance claims how to get clean water with self made devices.
Meteorological sign related knowledge and the popularization of secondary disaster.
Through this experience we saw a beautiful example.
<unk> premium content created by Jugal community was used to eat and instrumental weight to help provide a solution relief and bring a sense of comfort to those in need during a critical time of disaster.
We are proud that through the resources enabled by our platform.
We were able to meaningfully contribute to the social responsibility me up.
Yeah.
Both in times of crisis and on an ongoing basis.
A leading corporate citizen.
In addition to emergency assistance, particularly use is also encouraged to find solutions for their everyday real life problems.
That's a common purchasing decisions on our platform.
During the recent popular six one a shopping festival held in June we are encouraged to see the consumption related content on triple helped to users of all ages from their favorite items through high quality content with highlighting the professionalism the professionalism rationality high technology.
Novelty.
While users are having fun on our platform. They also enjoy the journey of discovering the right product for them and at the best price.
So on the user rather than in the third important characteristic of content. That's what's it meets all of his sense of humor vendor.
During the Olympics games. The question what do you see in the Tokyo Olympics that is more important than a good gold medal.
Enjoyed rigorous discussion the.
The most popular answer surprisingly similar characteristics.
Such as.
Iraqi Olympics teams with only for a member.
Michelle on the 58 year old table tennis player from Luxembourg.
Chusovitina the only gymnast in the work to have participated in eight consecutive Olympics games a mother.
All the stories and the messages highlighted the Olympics they rate.
This council with a sense of humans resonated strongly with users and received over 10000 cumulative interactions you just a few days.
And so far triple users have contributed more than 200000 pieces of Olympics related content to our platform.
Oh started by this massive content with a sense of a human juku garnered media crazy at the most sophisticated platform for Olympics related content that educates edifies at inspire to users.
[noise] upgrading the content on our platform also have further cement the trial. Among users you know community. We have made a corresponding revisions on the product side accordingly.
Optimizing our distribution and our ranking algorithm to enable content with a sense of humor it'll be more easily recommended consumed by users.
In addition to encouraging production of premium content with a sense of human through products technology and accretion. We have also perceived community compliance through proactive community governance and the scrutiny of Noncompliant content.
In the second quarter, we conducted a targeted community governance campaigns to ensure the long term health and prosperity of our community.
Why are we paying so much attention to and emphasizing premium content meeting the central fulfillment center.
Ultimately premium content defined by a strong sense of fulfillment center is well formed a unique DNA of trucost content offerings.
And differentiates us from other platform.
As they continue to improve our technology operational efficiency and upgrade the standard the details on our platform.
Constant with a central fulfillment will inspire deeper in the longer term trust among users.
This will be a key differentiator for our platform in the market strengthening our competitive advantage.
Now moving to the users.
Driven by premium content with a sense of a few minutes or a monthly active users continue to grow rapidly in the second quarter with average I mean us, reaching 94.3 million representing year on year growth of 46, 2%.
We are excited to see that the percent of active users of between 18, and 25 years old increased to 40% from 20% in the past few years.
Representing a increase over four times in absolute terms.
Users under the age of 20, sorry.
Sorry, I know the 825 accounted for a significant proportion of our new users in the second quarter.
As a group their favorite content, where it goes our education lifestyle in a consumer as well as science, one of each of whom cornerstone content verticals.
This clearly demonstrates that trimble has become a platform that attract younger demographics and our companies through their lives.
Geographically, we were pleased to see the percentage of users in tier two cities and below increased by 4% quarter to quarter to over 51%.
End of second quarter, which demonstrate encouraging progress in lower tier city penetration.
The rapid growth of Google's users in the second quarter was driven by continuous output of premier content inquiries.
Increased content consumption and our investment in branding during.
During the quarter.
For example, during the May 4th Youth Day, and college entrance examination period, we launched a number of high production value promotional videos.
These reviews in parts of his sense of humor that resonated strongly with a wide range of ages and attracted additional users to our platform.
For this year, you'll see we launched a short field jointly with the Communist Youth League.
The film was warmly welcomed across the Internet and that received more than 100 million views in just in just three days.
It generates a cross generational discussion and it resonated deeply with a wider range of people from students to workers and from 20 year old to 80 year olds.
Within our rapidly growing user base. This is a there's a special group of users that is other creative and active content creator pool. They.
They are driving they are the driving force behind you.
As of the end of June there were over $49.5 million cumulative content creators on the dual platform.
Well contributing to more than 420 million pieces of content in various permits.
Many video content greater we're active in the field such as science career lifestyle have already made to their private Mi primary platform for video content creation and distribution.
You can see and elderly pillar with over 40 years of industry experience shares is unique.
And the sophisticated insight and fashion through media.
Okay, Oh here selling short of Wall Street elite address our users curiosity and demand for financial knowledge through fund dedicated videos.
You may also be impressed by schuh quit the older of fitness notes and excellence creator, who previously expressed himself through graphics and text and it's now starting to share his secrets to health and beauty through creative videos.
In the second quarter, we further I to reach the upper beating tooth, enabling creators to easily arrange video content into segment and match those segments was related topics and questions on the puzzle.
These BD life Sciences can greatly increase the interaction efficiency between users and the video content creator inspiring further creation.
However, worried and multi format content with a sense of human it's created.
Filtered and surges through user interactions on our platform.
This council has become not only the cornerstone of the triple content ecosystem.
Tracking more content creators, but also the key driver in further enhancing the vitality of the whole digital platform.
Moving into commercialization.
The underlying driver for the commercialization of a constant communities its content itself print.
Premium content is a central fulfillment not only encourage engagement among users, but also improves user experience.
As well as bring more you know brings about more possibilities for commercialization.
In the second quarter to further optimize its revenue structure at the proportion of total revenue contributed by the cold and Commerce solutions and pay the membership continue to increase.
This demonstrates of a practice of a goat content makes for good business. Good business is.
He is on track.
Content is a sense of humor, not only addresses users' consumption needs for high quality content.
Also means the commercialization demands of our business partner.
In the second quarter common corporate solutions revenue reached RMB 200.074 million.
Accounting for 32% the total revenue.
And the representing a 15 times year over year increase.
Paid membership revenue for the quarter was RMB 154, 9 million contributing approximately 24% of the total revenue and representing a 124% year over year increase from the second quarter of 2020.
As a percentage of total revenue advertising revenue decreased to 39% in the quarter, Despite increasing 40.
48% year over year from the second quarter of 2020.
Before I was CFO share some more color on our financial performance I'd like to highlight our effort to strengthen our monetization capability in the second quarter.
We increased investment in our content centric commercial ecosystem by launching the chief platform in Chinese to shipping time, a commercial service platform for content creators.
By connecting creators and its business partners. This platform helps content creators to improve their monetization capabilities.
As well as meeting the wherewith monetization needs of business partners from the brand building to sales conversion.
For example, one of the content creators on the cheese platform delay.
A doctor of biology.
Biology, and science researcher from the Chinese Academy of Sciences.
Accepted our invitation from Laurel to address the question how to grow thicker hair.
Issue that bother many young people.
Mr. Li starting with the ingredients are parents of hair care products and have provided a detailed explanation and the step by step guidance.
This was all presented with easy to read text and images.
In plain, but especially the language.
Not only you factually relief.
Xiety users, but also provided a convincing recommendation for lori or anti hair loss products.
This is a great illustration of how good the commercial content cannot only become content with a sense of humans, but can also drive business growth for brands and merchants.
Every month, we published a ranking list of chicken creators in terms of a commercial value what.
What is it with the aim of recommending a constant creating talent with the most commercial value in various verticals.
In our latest top ranking list creators with the ability to create H in boats picture and text as well as the vd accounted for more than 50%.
Demonstrating the growth train of Duke was the video commercial content.
We believe you've asked me in products and services for our content creation system will lay a solid foundation for the development of content commercialization on our platform at scale.
With respect to brands or the merchants, we have noticed that in the context of our upgraded consumption. We are seeing an increasing number of emerging brands.
As a community that brings together the most creative users and content creators the fuse a technology business fashion film culture to become an important platform for the younger demographics lifestyle and a consumer purchase decision making.
With me today.
In collaboration with new emerging brands, we jointly launched the growth plan for emerging brands, otherwise known as the jungle Boot program.
Through this program, we work closely with selected brands to grow together and to increase direct interactions between these emerging brands and the users on <unk> platform to co creation of community content, especially even and joint marketing promotional events.
By doing so we encourage user feedback and enable users to see improvements in products and services.
At the same time, we provide a chance for our merchants and brands to join our quality content community to gain users recognition and trial.
Help them to achieve healthy in the long term development.
As of the end of July selected emerging brands, covering industries, including beauty and personal care basically the technology in a fast food have joined the program.
During this year.
Six one a festival.
This will become a grassroots community for our young generation user.
Thousands of questions and answers helpful to consumer decision, making constitute a unique triple market.
Among a large number of Q&A consumption related content in the firm itself professional evaluation view user experience tomorrow.
Marshalls recommendation as well as guidance have formed a unique shopping model Portugal.
Hell become as important search targeted for many consumers before they shop.
In the second quarter of 2021 high quality content consumption answer whose platform promoted the rapid growth in our E Commerce business.
Resulting in E Commerce G M D exceeding RMB 2 billion in the quarter up 115% year over year.
This demonstrates the consumption power of Truecar users.
In addition to the above we also achieved rapid growth in paying membership and the monetization process of other business lines, which will be discussed in more detail our CFO.
In conclusion in the second quarter of 2021 truthful maintained its strong growth momentum from the first quarter, we successfully passed a target for user scale content coverage expansion and monetization progress.
We owe such success Fuji, whose persistence in following our founding beliefs of the company.
Let me end todays prepared remarks with an excerpt from our speech of mine from 2019.
China's Internet industry has entered its Ed household.
When the peso for traffic turned to the bathroom for quality premium content and a health ecosystem become more than a passing freight but rather than rather.
Rather the core.
And the key element for the sustainable growth of our company.
That's jointly create a civilized and thriving ecosystem through healthy competition, enabling the internet to become a powerful driver to accelerate the growth of the whole nation.
We firmly believe that those who stay true to their founding beliefs will go the furthest.
This concludes the remarks of Mr. Julien I'll phone or an Seo, although I'll start with our financial performance review for the second quarter of 2021.
As previously mentioned, we delivered an outstanding set of financial results for the second quarter of 2021.
We recorded total revenue of RMB, $638.4 million, representing a 144, 2% increase year over year.
That's all content centric business model continued to drive the growth of our business.
Content Commerce solutions and pin membership together contributed over 50% to our total revenue.
In the second quarter of 'twenty, 'twenty, one or two plus business contributed RMB 200 zero 200.074 million in revenue mix.
Making two plus our second largest segment by revenue contribution in the quarter.
Representing an increase of 15 times over the same period of 'twenty 'twenty.
The strong growth momentum of surplus reflect the market recognition of its high marketing efficiency among merchants and brands.
The number of customers for the business line has increased tenfold since the first quarter of 2020.
In addition, a growing business partners and our brand portfolio for the business line also represents much broader coverage.
Including fast moving consumer goods vocational education.
And then personal care as well as Penn live services.
As we refined and introduces the sensor fulfillment at the new evaluation standards for content in the second quarter, we seek would we see great growth potential for J plasma.
We believe it will continue to at least the greater commercial potential of our platform going forward.
Advertising revenue achieved RMB $248.3 million for the second quarter of 2021.
Representing an increase of four to eight 4% over the same period of 2020.
The key driver of this rapid growth is the increase of advertising spending of our business partners as <unk>.
Many sectors are showing strong past pandemic recovery.
F M C G e-commerce and ultimate automotive.
Are among the strongest in terms of our advertising growth country.
Our paid membership revenue for the quarter was RMB 154.9 million.
Growing 123, 5% year over year.
Average monthly paying members doubling compared with the same period of last year.
Reaching four 7 million.
We're paying ratio continued to grow in the second quarter of 2020, 125%, while the average monthly revenue per paid.
Per pay the membership users remained stable.
We are proud to have been this many young talents grow with our paid membership service and we will continue our investment into this service to benefit all participants in our ecosystem.
Okay.
Yeah.
Other revenue, including new initiatives.
Primarily contributed by e-commerce and the location. The medication also performed strongly in the second quarter of 2021 with total revenue increasing by 131% year over year to RMB $27.8 million.
In this year's six one event a large number of consumption related content formed a unique shopping model for juul and the.
Lastly, the rapid growth of e-commerce business with a G M. We for the quarter exceeding RMB 2 billion up by one or 15% year over year.
But for Ed accretion income.
Which constitutes occupational and postgraduate examination preparation courses only.
<unk> made significant progress we.
We have seen a slightly higher proportion of our occupational courses I'm.
I'm, all wage or occupational skill improvement of courses such as writing skills training are overwhelming.
And we accept more diversified vertical and of course with such as post graduate examination related.
We have faith in the CPA preparation will contribute more in the coming quarter.
On the cost and the expense side.
Our reputation growing business drove a 12 a year over year increase of 94% in total cost of revenue to RMB $261.8 million for the second quarter.
The higher year over year increase was primarily due to the increases in our advertising services.
That's K fusion.
And contract related costs.
As well as our cloud services and bandwidth costs with a rapid user traffic well.
Well the total cost of revenue was inquiries our margin profile remains strong gross margin for the second quarter of 2021 with a 59% compared to 50.48, 4% for the same period of last year.
Our total operating expenses increased to RMB $727.1 million in the second quarter.
Driven primarily by investments in marketing promotional expenses and the human resources expenses for new head count.
Our marketing and promotional campaigns in the run up to China's college entrance exam the Gulf Coast.
Help us to effectively acquire new users and greatly enhanced our brand recognition, which we expect to benefits us both in the short term and long term.
Operating margin in the second quarter of 2021 narrowed from negative six 3% to negative 50, 454, 9% on a year over year basis.
Demonstrating our progressively stronger operating efficiency.
Our adjusted net loss, which is a non-GAAP measure that excludes share based compensation expenses was RMB 201, 3 million for the second quarter of 2021.
As of March 31.
2021 the company had a cash on cash equivalents term deposits restricted cash and short term investments of RMB.
$7703.1 million.
Finally, I'm, sorry financial outlook looking to the third quarter of 2021 the company expects total revenue to be in the range of RMB 815 million to RMB 820 million.
Flashing a year over year increase of 112, 9% to up to 114.2 per cent.
As a reminder, this outlook reflects <unk> current and preliminary estimates.
And is subject to change.
This concludes our earning remarks, operator, we're ready for the Q&A.
Thank you we will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchstone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from.
Huge Mumbai from Goldman Sachs. Please go ahead.
Thank you for taking my questions. My first question is about Europe and the U S.
Which is growing very nicely could you just take us through the dynamics of what has allowed that to happen and how close are you to the magic number of $100 million and if you look at your third quarter guidance could you give us a sense of whether the Mou number will be that's going to drive the.
The revenue guidance that you provided for the third quarter.
Second question concerns the mix in revenue between content Commerce solution and advertising how have you. How have you managed to grow your content commerce solutions, so nicely in the quarter and if you could just take us through the dynamics that have led to that and I just wondered on the regular on the performance advertising side, there's been a slight weakness what is the key.
Cause of that.
Could you just take us through those two questions that would be great. Thank you and then I'll have a follow up question.
Yeah until Vinci, let's say Goldman Sachs detailed 19 shale play it wasn't a young fortune jonjo tissue and they go to you go your own question, Jonathan Pinto Tico Tico without gas inflation, plus one the multicenter <unk> do that and then you would then Jai Johan Chartwell, no well, Michelle Michelle holding on adult Monaco with that I'll, let you go either in the.
Oh, Johnny to pay out the automobile dazzled anti nausea, you'll find your one day you could yeah War shall I N T.
You should just tell you what you see in Guam golf on the under you go yeah, well, which can be found me that you go Gandzha, you'll now know Monaco and Johnny shall when they shop and yet our cash.
Oh cool Minto Eagle shipping Nagel, how you're all shipping well that Johnny got some charter a ship to ship.
Yeah.
How do I take all of US Oh, let's say you don't talk about it because I'm kind of saying.
You bet.
Oh no one else is how can you shift.
Who would come down.
Sure.
Uh huh.
How much of a woman so San Jose got somehow got dropped.
But some time ago.
Not sure lives.
You'll recall the.
And the chicken needle sort that I go run it themselves or purely I'll dig a hole.
Part of it's it all it shows that made sense of who the Seo and cool dongle, you'll free chunk out of BD.
Doshi old needle.
She was on the two in Philadelphia.
So with that okay.
This is at the C O N phoned out off to fool, Mr. Joe again as for the use of garage, if you're familiar with our business you may understand that a large proportion of our unused to all of our new uses are actually attracted organically to our community by use of Craig.
<unk> content.
The movement in doing that he said Oh fish on something called the naval no needles.
You watch and see.
Yeah.
Juice the Sealy.
Just your thoughts you know I can jump in.
But she was on Europe hold outside the huge hole, Egypt literally the Tanzania Zambia.
Possibly changing shift so to see the Apple Tenda could you I know some of it but it just always yes okay.
Hmm.
And naturally you understand that's good content imposed direct and itchy new in impact on our usage in Kuwait attractiveness to this new juices and in different scenarios and different demands these kind of techniques attract.
No still uses a display that seasonality and cycles, which is.
Very prominent and I can explain.
In greater detail us now.
No George I believe about culture.
Actually you could see doing a josh and when it.
Half of them don't go up.
Oh, okay.
So as you can see them all.
Hi, Sean sulfate.
Oh cool.
Oh.
I'll take the children I should send him about that.
I think I'm supposed to chisel Virginian chunk walk I'll call National Bank financial.
I wish them luck with yellow.
She may take a couple of calls, saying you're back are coming together well shouldn't approach in household and do a call either.
But what I.
It sounds like the same needle.
Okay.
Now, let us take go cow examination as an example for this Oh just two months ago, we had the skull colleagues in China nationwide and during that period over 35, Amelia unused says have consumed alcohol related content.
And all community and this 35 million years says our S. Three times higher I S.
Our lead times I Stat, also who actually sat antique alcohol examination.
And we know that a lot of DAU MAU actually not only the high school graduates will take the examination, but also their parents their teachers and those who used to took this examination in the past.
So even though it was our.
Can I finish out she was at that particular deadline petzoldt issued insurance, whether you got trillion. That's what puts you said she loved them yet.
Oh well yeah.
So a lot of puts homepage. So that you don't want us to do that George I can hardly wait some cool yeah.
She said that she was telling you. They told me he isn't there you go.
Sure.
Oh man that Jamba shows around the world I know she sits on the door okay.
So this showcase it very obvious cycle of user activity or S week, where seasonality as we call. It and we are very happy to see that there are a lot of young users and users from different generations, who are very active during certain periods.
And have a lot of interactions with one another.
Yeah.
No.
Colorado was it appears your thoughts it gotcha.
Sure why not.
All of them, putting yes.
Take you'll bulk, California should what well yeah, yeah, so between the Gulf, which.
It doesn't do it come off a dwarf latasha TD shield trillion official institution that's all.
Should I take the example of doing huh.
Apple Okay.
Hum.
So at certain time after a year, we were organized especially shake activities. According to.
Two different user groups and their specific demands not only doing I'll call period, but also in other periods of the year, we would do so and to create more uses and check them to our community.
Okay.
Yeah, Julian I saw a woman such of course with no material has thoughts you know take some cushy olive garden dovetail into Yugo Cook with all four of them.
Are you going to a generic material tug of war parcel wind all told those of us that.
Triple net fishing Copel Donna townsell.
The other part that I didn't even software downloads of tow water honestly I mean, you'll be rule when gun also dealt with the two.
In India, the Jacobs CD album, Oh, My goodness.
Continue to rise.
We'll follow the trends on a weekday putting should suddenly if it's helpful.
That's all I know it's.
Tony a hold over the whole passenger can follow one Kendall Jenner and Dow Corning tolls Saddam pending to either you can we gain.
Hey.
And also in the past two months you see that we have launched and campaign called seeking answers in science are where we have attracted over 800000 creators on our platform to produce public education.
<unk> in science and these materials have scanned over 2.4 billion page views in total.
And another example is a short video film that we have created to celebrate the youth day the may four.
We just caught the reunion and they are attracting users from various generations, including those who are born as early as in 19 fifties and those who are born as late as odd after 2000.
Yeah.
Yeah, Charlie the order book that I saw that.
Take a bunch of Helena, especially in Europe.
But the trouble they go a whole place how long ago. It was yeah. So you know women tischendorf into the wall.
You saw that at all.
Oh, the cellphone and Deutsche in both doses in the film.
Some of them don't shoot.
We began to put in New Orleans casino titles, when they went to them.
Carlo a porcelain tile ensemble attach it.
Hey.
Mhm.
So thanks to our deep insights into our uses a we have a very nice outcome and nice efficiency in terms of user acquisition and as a result of all of campaigns and events.
And do you see that.
One thing that remains unchanged is that our content remained the main driver for us to attract users organically and they are able to seek values in all community when they join us. Thank you.
No I don't think I kind of just so it sounds like the things on that.
And she opened up you don't choose to stop go to Danielle <unk>.
How much would be dull quiet.
Let me say that I see yourself.
I'll now pass it off to do Oh, what do you see your tone sounds like all that I'm, just asking triple digit going off on its own.
You Didnt quite fit channel when do you see on call.
Okay.
So what Apple.
Yeah.
And we are also very happy to see that young users as a percentage to I'll use total user base is on the rise and our new uses recruitment in first new first tier cities and second tier cities are capped at a very healthy trend and that would give us a steady user increase.
Going forward in the future. Thank you and I'll have our CFO, Mr. Some way to make additional comments. Please.
Okay.
I'm just curious it wasn't knowledge when you use them.
Long ago, you used to give them to you now.
So as you know a woman say QR or so homes do you think I mean, you always.
Policy with Gen. She about what to.
Through June I should say and she says VTOL Haynesville Bala I'm curious what do you need you can feed housekeeping, either you know well Nishu Chico.
It's a very light so I realize the Mustang you tend to get squeezed between Oklahoma Central woman the shingles.
Oh gosh, John since you've owned it.
One is that true who you'll come in below the knee.
So you won't see a woman quite music to go you can put the funds that will be all yeah sure thing.
I'll go with that Q. So there's all the things I told you read them in Europe.
Yeah.
Hmm.
So our analysts to ask about when when when we hit the target of 100 million Apt excuses well are we are now doing 90, 999 meal Ah 90, 990000, Oh, sorry, 99 million and that is very close to our you know big talk.
Oh for 100 million AR, but I should say that our ultimate goal is to attract those users and make them stay and make them active in our community. So I think with all sorts of efforts that we are making are we have the right confidence to say that we could hit that target of 100 million in Q4.
And and to make them stay in active in in our so-called thank you.
Okay.
Okay.
Jonathan do not wish him much is now that you know when I'm in front of them to Macquarie I wish them well it seems though you he's sure.
Woman.
The well not cool so of course, you Diego Q2 dollar Freetown quite through the Chico's summed up well, Nicole Russell illness, Palumbi, Chantal and she's bummed out what's hobo bags.
Okay.
So I stood a question also G plus business why we had such a stellar quarter is because that I'll use. The on this regard has increased by over 100% in the last quarter.
He says I have quite a cool it's a couple of questions. One on who's sure. She's absolutely you are pretty darn cold shoulder anytime people either G cause somebody to show up at all three time, the deep dig a ctr teaches the parcel that sometime ago promotional are you in a couple different dwell on the CPC G. G. The thing you've got to shop when deemed the Thunder pumps.
Gotcha.
Because we have a 500% increase that's about client tell us.
Our mechanism all such a plus became much more effect, if any alcoholics quite a positive for US you can see the indicators such as C. T. R. A it looks very good and also see B C under our beating system increased to as much as 20%.
And so it's a job in Philadelphia, you don't quite see the whole shortly of each of the three time ago pension alone contactless soon as Alex pointed out we've done that.
Yeah, that's a girl argued.
Sure Josh the Xiaomi email social newly al if I may.
Total wenzhou, my somebody to who to go to you.
We told them. They also know that as well I shouldn't lose if we don't do that.
Yeah.
Despite the fact that our <unk> plus business is growing very fast and healthily are we still think that you're plus has huge potential as to unleash going forward because right now we only have less than 50000 pieces of content commerce solution content.
Compared with our total our content library off of 420 million pieces of content. This is still a very very small tiny propulsion.
Hmm.
Something I hate it when he was quite easy.
Regulatory lag going to I'm going to.
So we work with us.
Okay.
Great. Thanks, Tim on a bunch of them.
Especially with affirmative got block so we said okay Sally.
You got to do one this year.
Yourself.
Mhm, so if I'm not mistaken I think there was a question about regulation would you mind, maybe specifically ask what kind of areas do you want to know more about the regulation.
Okay.
We just want to know the impact of the sectors that have seen a slowdown on a kind of regulation what is your exposure to those sectors.
Oh, yeah yeah.
Yeah, Yeah, Todd English Bulldog, Jim Gouin shot and cannot be John Lee has so you saw what happened at central kind of placed on what did I say, yeah. We should all be talked out of you Michele no ones that you see it towards the initial dog jumped out of Hollywood Dongle, well may shuffle youll be dealt water equal yeah without EMEA shuffle ways, you would argue Michele Tyler Chengdu, you'll do that.
Yeah.
So those are the ones you whenever that.
Consequently, it turns out that though are kind of all the oh hang out and doesn't want to go.
Fishing.
It took us some features that fragile.
Well they'll come partners kind of partners are trying until I saw how can you actually you'll need to put them on yeah. There you go.
And especially how well it did I assume the truth.
Tricia and the child that you see.
So.
Oh I'm sure sure.
Hmm.
We're kind of in that sense, you don't actually have a quota.
I mean, if I'm going to go on and they take.
Yeah, a couple of thoughts here go.
It wasn't that Sundar Hudson Linda.
Corporate attendees.
D go.
The old together.
Okay.
Well as for those are specific areas that are a heavy handedly traded by together and there is certainly I think that our client in our client makes the exposure, whereas the percentage of the client and those areas are not very high and therefore.
Our business exposure to regulatory crept down is controllable and we believe that for the long term does this as a positive sign a far far the internet industry and so we were part of it for their longer term. So we are we are positive about that.
Yeah.
Yeah.
Yes.
You bet.
Okay.
The next question comes from Alex <unk> from Credit Suisse. Please go ahead.
Hi management. Thank you for taking my questions and congratulations on a very strong quarter.
My first question is about your video initiatives. So would you. Please elaborate more about the optimization of the structure in your video.
Have more data points to show the impact of the.
Our adjustments and when do you expect the optimization potence to them become to be completed and.
What about the outlook of our video and accretion in the second half.
The second question I think about.
Your.
Major content driven user acquisition events.
In the second half so in the first half we have seen.
They're a very successful impact from your.
The tendency of anniversary as well as the cold called depends what will be the key events that we should look for in the second half. Thank you.
Hello, Julio don't tell then T detailed andi assure you while you when they ship he never once you go to you go Chow J E T Uruguay El Nino tissue to take on the same satellite as usual well I'm not sure. If he made Aldo Johnny Youll find yourself, what you mentioned Michel Lenovo Rancho are shut down you know all of them and a video ship. He know Hugo Shen told me moved Outback I should do.
Sure Yeah.
And here she opened in New York with Sunshine find many da Vinci XI I'm Danielle when would they use your oh quite a haul don't fish on the Hong Kong B I wish all of you who she's only in a junior watershed I'll call them as I stopped by Naomi Ocean won't be that jumped out that you should see a woman Patriot Chi that G. SEC.
Yeah.
But I think it'll wash out after those are going to ship.
The MAU sends out a two where the stripping me translate itself into Cushing.
Krish the floor yet.
Would it be.
Jake Oh did you do when you get a junior J shipping trouble shoot Helena Montana.
So don't want that to be filled out that shows how all of that.
Sure.
Sundar.
On.
Talbot dossier.
Felicia Sunday Israel.
Okay.
Yeah.
Yes. This week splendor in the opening remarks that our video content creators had been increasing dramatically by 75% upon sleep video creators in the second quarter and the daily upload volume increased by three times.
Yeah.
Number two just shipyard.
Hold on just a concern I mean should also trigger to your goal.
Well Miss you at least once Apple.
So it's just sometimes the assumption you will fragile.
So I was just wondering what elements European Pushout, you called Cody does that come down as you switch a little practices.
Sure the user so your question, so you're going to be a harsh equivalent to peel apart, but just hello, Carlos as such there's sometimes IPO that shut him talking about jaw shellfish and he was telling me he go yep Yep.
Okay.
Hum.
So I think that behind those nice numbers is our emphasis on the Iqos system. Because we think that video business is not just a stand alone business. We believe that video content is part and partial I'll follow content library at Yahoo. So in reality I think.
The increase off of video content and the active content creators on videos and consumers all videos are actually a reflection of our of the changes in our ecosystem and our community.
Sure.
What I had been shown to announcing something.
You got to ensure that should consolidate you go Peel Hunt Joshua Tilton Chip and then once you see on income, but you don't want to be on high yield assumption there would be helpful.
Okay kind of out there.
And as usual the G. Five families just frankly, unfortunately, I'm gonna yeah, perhaps when they take a selfie Greenway fund yeah sung jong of passenger mix actually.
Passenger you buy you sharp co passenger wish about how the whole don't even though you have some good things on the backs of the rebounding on the fringes, but you shouldn't go back from two.
Essentially.
Oh, Yeah, there's always shifting this anymore okay.
Yeah.
So oh content creators and consumers are becoming active and consuming those detection images. That's my last of videos, maybe I can show you some numbers.
For instance, in the area of our engineering technology economics and loss the consumption of techs that image increased by 100, and studied 6%, 112% and 58% respectively and the interaction increased by one.
102%, 111% and 134% respectively.
Remember that should give me you're gonna take Oh, gosh, IPO Torchwood, the Chile, even though you know she can call you honest, so codell and defend that shouldn't take a cookie is shlomo.
Technical too long ago that just shifting the bolting on Oh, yes.
Central Hudson's judicial Gonna take a young graduate with it so I'll let you.
Okay.
So I think I'm going to call it okay.
Yeah.
As for video consumption and have been also very active and a top areas are health as well as humanities and digital devices are the actual numbers of D video Consumptions and interactions to save time, I won't elaborate right now and I can share the details on.
Those numbers with you later on after this call.
One of them or something like that.
No one says Oh, I know what ill say.
We'd all women.
So pablo the well theyre going to children.
Industrial literally all across Europe.
So just how general hygiene.
The whole changing congestion attention.
Is to school year, the New school year is about to start pretty soon.
And are we will continue to encourage our content curation and interaction encouragement and those are in the forum also video with the help of our newest benchmark on the sensor fulfillment, we will focus on certain areas such as a humanity.
These economics are career development and et cetera.
Okay.
Okay.
So Alex I wouldn't let you can blame them and the OPEC davinci, so without with either no.
Bill.
Okay.
Yeah.
Okay.
Yeah.
The next question comes from Union Zhao from C. O S. T. SEC. Please go ahead.
Okay.
So bill with you and that's your favorite orphan.
When she needs it.
Yes, yes.
Well, you would seem to us to siobhan.
Siobhan you end up.
You can see.
And she does either.
So I can say Oh, I see you can forget about eagle weights out enough. So they should do you see yourself I need those conditions up there.
T sport.
She told me she goes home depot.
What makes your phone so.
Well if you find yourself in that question about the guidance on the second half expenses operating expenses, especially for the sales and marketing.
Could you be lot more color.
CPC investments eruptions, Florida as you yourself said in marketing expenses.
Yeah.
Okay.
So you can see when you went off with Asia.
A woman stockyard is operating expenses.
Like I said he did a R T and B. So that you don't want to go on the social marketing home the R&D spend a lot of thinking about the posture.
Do you I mean, there's still some work and I just want to woman.
Woman, though I may use that you can get on the movies you talked at all just because you don't know when she signs ally when the Archie to the agenda and they usually to Chancellor Angela She goes to a younger target women, which under an illogical move Delta is what counts.
With a total knee teed up okay.
Okay.
So as for operating costs in Q2.
We had operating costs totaling at 707, and 227, Amelia on R&D and sales and marketing R&D, putting together are contributing to 80% of that expenses well as far as the south and marketing specifically I should say a full point out that our MAA you.
Increased by 46% year on year are standing at 94, Neely N uses which is actually beyond our target set for this quarter.
So you took a corporate citizen that I'm able to find out what it means though you can email it to them, but how bush as Bob says, Bobby maybe now Chico Jamba nurses that draw any other people on the bus units, which will one day silicone market and that's a good telephone and showing them the ROI.
I'll call them, the southern yellow I suppose that you grow a voucher your poker loosen Chico's I feel like you can work out what interests you the see the marketing people.
And are the costs do we spend on each new M. A U is less than 48, RMB, which is sitting at the lower end of the spectrum of the internet industry. So this proves that our sales and marketing activities are quite so fast.
So and we're seeing very good our I Aldo if our sales and marketing expenses. So we will keep an eye on our CAC and all our retention rate and we will continue to spend R&D as a sales and marketing money to acquire more and they use and grow that number. Thank you.
The only my Apple then the Seo and social woman the R&D not women should I take a quarter of your line of women's and say Oh, let's just use a dry dock ultra done it in telecom, Argentina in Baha Blanca, Algeria and buttons.
So on the R&D it will become dominant.
Mr should lead it Specialness showed me some thoughts about me back.
Don can I ask one on the injunctions that prevents you from that okay.
Hum.
Our R&D is another key element to our operating expenses as we keep quoting a great talent, especially R&D talent to support our business school hours in Q2 are the R&D expense increases of 40% year on year, well interesting revenue increase just a one time.
44%, which is by far higher than the rate of the R&D expenses gross so hot that is a proof that we have been quite efficient in terms of R&D expenses.
Well, it's not on your wish list.
Oh Cool G hi, the Portuguese on some people who don't want me if we see good homework when he saw that chip I'll feel neutral through the honey. She seems you'd go shop, one that age group into the junket play what would you say to yourself.
A teacher meet your the jingle from.
I want to Tango income here that you just didnt put new ones.
Is it.
Hum.
So entering into the second half of a year out we will keep spending on getting more uses and getting better talent to join our business and we will make sure that the expenses are reasonable necessary and effectively used and to has a.
Stringent monitoring system on a by a rolling of accounting.
My search to make sure that we're spending the money wisely.
Oh that's tickets.
Thank you Dusty and if my answer for Opex. Thank you.
The next question comes from <unk> Chang from 86 research. Please go ahead.
Yeah.
No hockey I guess, I'm Lucky right, Oh, well not months eager Joshi of Joe Oh, God I, just don't want to once again things that don't even send out one time just since I saw him on board and I suppose you can say okay.
No name them put upon colony room, Oh for sure.
Yeah I'm sure you all can die young girl Yanzhou grading how do you feel just you could say that the phone sir not that women are having more countries. If I'm young play two hoops and hard trying to ensure that George Oh without question, we're killing each other are shown in the article.
So I'm glad that you're here should you don't get any fundamental arguable Tricia you said you're doing a few on the midyear you'll Chicago.
What they're told them no you answered it.
He said you know what you're going to go off of.
Retention of short haul only happened once you reach a horse on me I don't think we have to shoot you grew up in what Tricia.
I can't blame myself good evening management. Thank you for taking my questions I have a phone call for a question on the <unk> on the regulatory front I'm wondering have you seen more that GAAP op by the regulators on paint paying attention to the media content. The content, we think the act data security Oh.
This will be a potential risk going forward.
And what could be the impact on two who are from these FX on my second question is on the European Beautiful last question on the just on matrix for the second quarter. If you could share a sequential trend for the a D. A new antenna spanning all also any updates on the retention of our young sponsors is that Oh.
How should we expect the trend of user engagement and traffic metrics aren't you who in the future I think.
Yeah.
Oh, that's right after that how do you go in.
I'm going to take a shortage of Hyundai online channel.
So I shouldn't say a real fine tune its own casual titles are you already are.
Pulling along the terms you know talking to the general thought that okay.
Oh, well man Mr. Joanne will address the first question about the regulatory issues and data security what would believe that the government's policy with regard to content and data compliance is off for the long term health and save.
Development of our business and our industry at large.
Yeah.
Oh well.
We'll do the Anshan ship will be there Josh.
Of course the label now that's just home.
I was just trying to show some of the images. This kind of goes all the tissues of testing.
We're trying to teach our team the Belgium, the modems that Neil that's a cool shouldn't actually from your tissue Cola three times or the elite shouldn't have shaken whatsoever. Okay.
As for data security, we have been investing a lot in terms of that technology and management approaches by upgrading our standards and better management of that data and et cetera to safeguard the security of the data that we have and when it comes to content.
Oh, well, we are also taking up Oh, some measures to make sure that our content out of a high quality and are you know properly.
<unk> produced in our community integral.
Some of them and that's what I was thinking I should imagine.
So sure there's a crazy.
What does it take you though.
Oh, Yeah chip on this Asia saw us.
Also I take Oh, gosh, How're you doing.
Jenny you gosh stripes in old age.
Personnel Amir.
Each of the Tiguan woman to sure that you can go to chip ball and of course, you shouldn't trigger I lost a woman she had oh yeah. Okay.
And we have also conducted some industry survey to make sure that we are in a leading position in terms of that they have security in our area and we are also in constant communications with the competent regulators are to make sure that we will show there.
Our responsibility fully and properly.
Yeah.
Uh huh.
Hey, what's up with what you said.
They don't tell me that okay condo no official endorsement that the tape on May one.
Uh huh.
A triple Sharma, you often blood I take drama coming that yeah, well, yeah. So that's how you should talk to.
Send me an E.
So you paid it on their own saavedra, Okay come down do you seen tree Amanda to D. C is all done.
So that fashion that she can do.
Uh huh.
Okay.
And in terms of our content Oh, I should say that are under some.
Topics and discussions are that our highly popular in all community. We can also see the voices are from the central media to you know to participate and made contributions as well so as they used to of all communities will be able to understand some shutdown issue was some current issues and a reasonable.
And comprehensive way.
Yeah.
Hmm.
Although our country up without a bagel and she's not going to the arguments you know.
You know who the incremental advertising so.
There are people to some jobs, where you sit how long she will do that so if you don't fly the pension the woman confused you look I know, we're not put off for years I. Just don't you don't put a shirt home she's a domain with someone coming to you know Denver well that's true.
The Apple done this you're telling us about some of the demos of course, you're the only issue do you go about.
Padgett with Cumulus and she was sure Townsville boxes, I think home a deep mail you know you can work with it.
But he said no no we didn't.
We're not sure the trend Glenda.
You you'll be shocked I mean, what are your highest.
Apple dwindle it'll be I mean, hopefully the southern girl cure, although sure Jacob and things that I'm sure you're talking about gosh.
Oh Gee Gosh, we'll Miss you just cannot their children. She really thinks would you have that season.
She goes through the <unk> I mean, you alluded to before here that you have got any other dollar what the whole thing.
On the phone who the Chico a J good hopefully if they don't quite so some go Q2 am to noon food and told all of you getting worried.
But what <unk> done as you know I'm kind of once you start to do their jobs well, we're not sure trying to Wuxi, the cheeky yoga high synergy with Japan, Japan income. Thank you. She really you can eval CAGR since without golf when do some of the giga somehow a meal or some magic a sharper.
As for Houston that shakes are this is from Cfo's away. So for Q2 I'll use this keeps growing very well and at the time spent on <unk> remained very stable compared with the past consecutive eight to nine quarters and in terms of the active.
D level was you'll see that the D. A <unk> the ratio of at D. A you versus MAA you remained a 75% which is quite a staple even we saw a slight increase in July.
When it comes to paid membership in Q2, we are nudging towards 5 million members paid members and the renewal rate for either mostly subscription where six months subscription both remained very stable. So theyre looking very well.
Yeah.
Due to time constraints that concludes today's question and answer session. At this time I will turn the conference back to changing for any additional or closing remarks.
Yeah.
Thank you all once again for joining US today, if you have any further questions. Please contact our IR team directly or TPG Investor relations. Thank you.
Thank you.
The conference has now concluded thank you for attending today's presentation.
May now disconnect.
Okay.
Yeah.
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Okay.
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